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Republic of the Philippines

SUPREME COURT
Manila

SPECIAL THIRD DIVISION

G.R. No. 195580 January 28, 2015

NARRA NICKEL MINING AND DEVELOPMENT CORP., TESORO MINING AND DEVELOPMENT, INC., and
McARTHUR MINING, INC., Petitioners,
vs.
REDMONT CONSOLIDATED MINES CORP., Respondent.

RESOLUTION

VELASCO, JR., J.:

Before the Court is the Motion for Reconsideration of its April 21, 2014 Decision, which denied the Petition for Review
on Certiorari under Rule 45 jointly interposed by petitioners Narra Nickel and Mining Development Corp. (Narra),
Tesoro Mining and Development, Inc. (Tesoro), and McArthur Mining Inc. (McArthur), and affirmed the October 1,
2010 Decision and February 15, 2011 Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 109703.

Very simply, the challenged Decision sustained the appellate court's ruling that petitioners, being foreign corporations,
are not entitled to Mineral Production Sharing Agreements (MPSAs). In reaching its conclusion, this Court upheld with
approval the appellate court's finding that there was doubt as to petitioners' nationality since a 100% Canadian-owned
firm, MBMI Resources, Inc. (MBMI), effectively owns 60% of the common stocks of the petitioners by owning equity
interest of petitioners' other majority corporate shareholders.

In a strongly worded Motion for Reconsideration dated June 5, 2014, petitioners-movants argued, in the main, that the
Court's Decision was not in accord with law and logic. In its September 2, 2014 Comment, on the other hand,
respondent Redmont Consolidated Mines Corp. (Redmont) countered that petitioners’ motion for reconsideration is
nothing but a rehash of their arguments and should, thus, be denied outright for being pro-forma. Petitioners have
interposed on September 30, 2014 their Reply to the respondent’s Comment.

After considering the parties’ positions, as articulated in their respective submissions, We resolve to deny the motion
for reconsideration.

I.

The case has not been rendered moot and academic

Petitioners have first off criticized the Court for resolving in its Decision a substantive issue, which,as argued, has
supposedly been rendered moot by the fact that petitioners’ applications for MPSAs had already been converted to an
application for a Financial Technical Assistance Agreement (FTAA), as petitioners have in fact been granted an FTAA.
Further, the nationality issue, so petitioners presently claim, had been rendered moribund by the fact that MBMI had
already divested itself and sold all its shareholdings in the petitioners, as well as in their corporate stockholders, to a
Filipino corporation—DMCI Mining Corporation (DMCI).

As a counterpoint, respondent Redmontavers that the present case has not been rendered moot by the supposed
issuance of an FTAA in petitioners’ favor as this FTAA was subsequently revoked by the Office of the President (OP)
and is currently a subject of a petition pending in the Court’s First Division. Redmont likewise contends that the
supposed sale of MBMI’s interest in the petitioners and in their "holding companies" is a question of fact that is outside
the Court’s province to verify in a Rule 45 certiorari proceedings. In any case, assuming that the controversy has been
rendered moot, Redmont claims that its resolution on the merits is still justified by the fact that petitioners have
violated a constitutional provision, the violation is capable of repetition yet evading review, and the present case
involves a matter of public concern.

Indeed, as the Court clarified in its Decision, the conversion of the MPSA application to one for FTAAs and the
issuance by the OP of an FTAA in petitioners’ favor are irrelevant. The OP itself has already cancelled and revoked
the FTAA thusissued to petitioners. Petitioners curiously have omitted this critical factin their motion for
reconsideration. Furthermore, the supposed sale by MBMI of its shares in the petition ercorporations and in their
holding companies is not only a question of fact that this Court is without authority toverify, it also does not negate any
violation of the Constitutional provisions previously committed before any such sale.
We can assume for the nonce that the controversy had indeed been rendered moot by these two events. Asthis Court
has time and again declared, the "moot and academic" principle is not a magical formula that automatically dissuades
courts in resolving a case.1 The Court may still take cognizance of an otherwise moot and academic case, if it finds
that (a) there is a grave violation of the Constitution;(b) the situation is of exceptional character and paramount public
interest is involved; (c) the constitutional issue raised requires formulation of controlling principles to guide the bench,
the bar, and the public; and (d) the case is capable of repetition yet evading review. 2 The Court’s April 21, 2014
Decision explained in some detail that all four (4) of the foregoing circumstances are present in the case. If only to
stress a point, we will do so again. First, allowing the issuance of MPSAs to applicants that are owned and controlled
by a 100% foreign-owned corporation, albeit through an intricate web of corporate layering involving alleged Filipino
corporations, is tantamount to permitting a blatant violation of Section 2, Article XII of the Constitution. The Court
simply cannot allow this breach and inhibit itself from resolving the controversy on the facile pretext that the case had
already been rendered academic.

Second, the elaborate corporate layering resorted to by petitioners so as to make it appear that there is compliance
with the minimum Filipino ownership in the Constitution is deftly exceptional in character. More importantly, the case is
of paramount public interest, as the corporate layering employed by petitioners was evidently designed to circumvent
the constitutional caveat allowing only Filipino citizens and corporations 60%-owned by Filipino citizens to explore,
develop, and use the country’s natural resources.

Third, the facts of the case, involving as they do a web of corporate layering intended to go around the Filipino
ownership requirement in the Constitution and pertinent laws, requirethe establishment of a definite principle that will
ensure that the Constitutional provision reserving to Filipino citizens or "corporations at least sixty per centum of
whose capital is owned by such citizens" be effectively enforced and complied with. The case, therefore, is an
opportunity to establish a controlling principle that will "guide the bench, the bar, and the public."

Lastly, the petitioners’ actions during the lifetime and existence of the instant case that gave rise to the present
controversy are capable of repetition yet evading review because, as shown by petitioners’ actions, foreign
corporations can easily utilize dummy Filipino corporations through various schemes and stratagems to skirt the
constitutional prohibition against foreign mining in Philippine soil.

II.

The application of the Grandfather Ruleis justified by the circumstances of the case to determine the nationality of
petitioners.

To petitioners, the Court’s application of the Grandfather Rule to determine their nationality is erroneous and allegedly
without basis in the Constitution, the Foreign Investments Act of 1991 (FIA), the Philippine Mining Act of 1995,3 and
the Rules issued by the Securities and Exchange Commission (SEC). These laws and rules supposedly espouse the
application of the Control Test in verifying the Philippine nationality of corporate entities for purposes of determining
compliance withSec. 2, Art. XII of the Constitution that only "corporations or associations at least sixty per centum of
whose capital is owned by such [Filipino] citizens" may enjoy certain rights and privileges, like the exploration and
development of natural resources.

The application of the Grandfather Rule in the present case does not eschew the Control Test.

Clearly, petitioners have misread, and failed to appreciate the clear import of, the Court’s April 21, 2014 Decision.
Nowhere in that disposition did the Court foreclose the application of the Control Test in determining which
corporations may be considered as Philippine nationals. Instead, to borrow Justice Leonen’s term, the Court used the
Grandfather Rule as a "supplement" to the Control Test so that the intent underlying the averted Sec. 2, Art. XII of the
Constitution be given effect. The following excerpts of the April 21, 2014 Decision cannot be clearer:

In ending, the "control test" is still the prevailing mode of determining whether or not a corporation is a Filipino
corporation, within the ambit of Sec. 2, Art. XII of the 1987 Constitution, entitled to undertake the exploration,
development and utilization of the natural resources of the Philippines. When in the mind of the Court, there is doubt,
based on the attendant facts and circumstances of the case, in the 60-40 Filipino equity ownership in the corporation,
then it may apply the "grandfather rule." (emphasis supplied)

With that, the use of the Grandfather Rule as a "supplement" to the Control Test is not proscribed by the Constitution
or the Philippine Mining Act of 1995.

The Grandfather Rule implements the intent of the Filipinization provisions of the Constitution.

To reiterate, Sec. 2, Art. XII of the Constitution reserves the exploration, development, and utilization of natural
resources to Filipino citizens and "corporations or associations at least sixty per centum of whose capital is owned by
such citizens." Similarly, Section 3(aq) of the Philippine Mining Act of 1995 considers a "corporation x x x registered in
accordance with law at least sixty per cent of the capital of which is owned by citizens of the Philippines" as a person
qualified to undertake a mining operation. Consistent with this objective, the Grandfather Rulewas originally conceived
to look into the citizenshipof the individuals who ultimately own and control the shares of stock of a corporation for
purposes of determining compliance with the constitutional requirement of Filipino ownership. It cannot, therefore, be
denied that the framers of the Constitution have not foreclosed the Grandfather Rule as a tool in verifying the
nationality of corporations for purposes of ascertaining their right to participate in nationalized or partly nationalized
activities. The following excerpts from the Record of the 1986 Constitutional Commission suggest as much:

MR. NOLLEDO: In Sections 3, 9 and 15, the Committee stated local or Filipino equity and foreign equity; namely, 60-
40 in Section 3, 60-40 in Section 9, and 2/3-1/3 in Section 15.

MR. VILLEGAS: That is right.

xxxx

MR. NOLLEDO: Thank you.

With respect to an investment by one corporation in another corporation, say, a corporation with 60-40 percent equity
invests in another corporation which is permitted by the Corporation Code, does the Committee adopt the grandfather
rule?

MR. VILLEGAS: Yes, that is the understanding of the Committee.

As further defined by Dean Cesar Villanueva, the Grandfather Rule is "the method by which the percentage of Filipino
equity in a corporation engaged in nationalized and/or partly nationalized areas of activities, provided for under the
Constitution and other nationalization laws, is computed, in cases where corporate shareholders are present, by
attributing the nationality of the second or even subsequent tier of ownership to determine the nationality of the
corporate shareholder."4 Thus, to arrive at the actual Filipino ownership and control in a corporation, both the direct
and indirect shareholdings in the corporation are determined.

This concept of stock attribution inherent in the Grandfather Rule to determine the ultimate ownership in a corporation
is observed by the Bureau of Internal Revenue (BIR) in applying Section 127 (B) 5 of the National Internal Revenue
Code on taxes imposed on closely held corporations, in relation to Section 96 of the Corporation Code 6 on close
corporations. Thus, in BIR Ruling No. 148-10, Commissioner Kim Henares held:

In the case of a multi-tiered corporation, the stock attribution rule must be allowed to run continuously along the chain
of ownership until it finally reaches the individual stockholders. This is in consonance with the "grandfather rule"
adopted in the Philippines under Section 96 of the Corporation Code(Batas Pambansa Blg. 68) which provides that
notwithstanding the fact that all the issued stock of a corporation are held by not more than twenty persons, among
others, a corporation is nonetheless not to be deemed a close corporation when at least two thirds of its voting stock
or voting rights is owned or controlled by another corporation which is not a close corporation.7

In SEC-OGC Opinion No. 10-31 dated December 9, 2010 (SEC Opinion 10-31), the SEC applied the Grandfather
Rule even if the corporation engaged in mining operation passes the 60-40 requirement of the Control Test, viz:

You allege that the structure of MML’s ownership in PHILSAGA is as follows: (1) MML owns 40% equity in MEDC,
while the 60% is ostensibly owned by Philippine individual citizens who are actually MML’s controlled nominees; (2)
MEDC, in turn, owns 60% equity in MOHC, while MML owns the remaining 40%; (3) Lastly, MOHC owns 60% of
PHILSAGA, while MML owns the remaining 40%. You provide the following figure to illustrate this structure:

xxxx

We note that the Constitution and the statute use the concept "Philippine citizens." Article III, Section 1 of the
Constitution provides who are Philippine citizens: x x x This enumeration is exhaustive. In other words, there can be
no other Philippine citizens other than those falling within the enumeration provided by the Constitution. Obviously,
only natural persons are susceptible of citizenship. Thus, for purposes of the Constitutional and statutory restrictions
on foreign participation in the exploitation of mineral resources, a corporation investing in a mining joint venture can
never be considered as a Philippine citizen.

The Supreme Court En Banc confirms this [in]… Pedro R. Palting, vs. San Jose Petroleum [Inc.]. The Court held that
a corporation investing in another corporation engaged ina nationalized activity cannot be considered as a citizen for
purposes of the Constitutional provision restricting foreign exploitation of natural resources:
xxxx

Accordingly, we opine that we must look into the citizenship of the individual stockholders, i.e. natural persons, of that
investor-corporation in order to determine if the Constitutional and statutory restrictions are complied with. If the
shares of stock of the immediate investor corporation is in turn held and controlled by another corporation, then we
must look into the citizenship of the individual stockholders of the latter corporation. In other words, if there are layers
of intervening corporations investing in a mining joint venture, we must delve into the citizenship of the individual
stockholders of each corporation. This is the strict application of the grandfather rule, which the Commission has been
consistently applying prior to the 1990s. Indeed, the framers of the Constitution intended for the "grandfather rule" to
apply in case a 60%-40% Filipino-Foreign equity corporation invests in another corporation engaging in an activity
where the Constitution restricts foreign participation.

xxxx

Accordingly, under the structure you represented, the joint mining venture is 87.04 % foreign owned, while it is only
12.96% owned by Philippine citizens. Thus, the constitutional requirement of 60% ownership by Philippine citizens
isviolated. (emphasis supplied)

Similarly, in the eponymous Redmont Consolidated Mines Corporation v. McArthur Mining Inc., et al.,8 the SEC en
bancapplied the Grandfather Rule despite the fact that the subject corporations ostensibly have satisfied the 60-40
Filipino equity requirement. The SEC en bancheld that to attain the Constitutional objective of reserving to Filipinos the
utilization of natural resources, one should not stop where the percentage of the capital stock is 60%.Thus:

[D]oubt, we believe, exists in the instant case because the foreign investor, MBMI, provided practically all the funds of
the remaining appellee-corporations. The records disclose that: (1) Olympic Mines and Development Corporation
("OMDC"), a domestic corporation, and MBMI subscribed to 6,663 and 3,331 shares, respectively, out of the
authorized capital stock of Madridejos; however, OMDC paid nothing for this subscription while MBMI paid
₱2,803,900.00 out of its total subscription cost of ₱3,331,000.00; (2) Palawan Alpha South Resource Development
Corp. ("Palawan Alpha"), also a domestic corporation, and MBMI subscribed to 6,596 and 3,996 shares, respectively,
out of the authorized capital stock of PatriciaLouise; however, Palawan Alpha paid nothing for this subscription while
MBMI paid ₱2,796,000.00 out of its total subscription cost of ₱3,996,000.00; (3) OMDC and MBMI subscribed to
6,663 and 3,331 shares, respectively, out of the authorized capital stock of Sara Marie; however, OMDC paid nothing
for this subscription while MBMI paid ₱2,794,000.00 out of its total subscription cost of ₱3,331,000.00; and (4) Falcon
Ridge Resources Management Corp. ("Falcon Ridge"), another domestic corporation, and MBMI subscribed to 5,997
and 3,998 shares, respectively, out of the authorized capital stock of San Juanico; however, Falcon Ridge paid
nothing for this subscription while MBMI paid ₱2,500,000.00 out of its total subscription cost of ₱3,998,000.00. Thus,
pursuant to the afore-quoted DOJ Opinion, the Grandfather Rule must be used.

xxxx

The avowed purpose of the Constitution is to place in the hands of Filipinos the exploitation of our natural resources.
Necessarily, therefore, the Rule interpreting the constitutional provision should not diminish that right through the legal
fiction of corporate ownership and control. But the constitutional provision, as interpreted and practicedvia the 1967
SEC Rules, has favored foreigners contrary to the command of the Constitution. Hence, the Grandfather Rule must be
applied to accurately determine the actual participation, both direct and indirect, of foreigners in a corporation engaged
in a nationalized activity or business.

The method employed in the Grandfather Rule of attributing the shareholdings of a given corporate shareholder to the
second or even the subsequent tier of ownership hews with the rule that the "beneficial ownership" of corporations
engaged in nationalized activities must reside in the hands of Filipino citizens. Thus, even if the 60-40 Filipino equity
requirement appears to have been satisfied, the Department of Justice (DOJ), in its Opinion No. 144, S. of 1977,
stated that an agreement that may distort the actual economic or beneficial ownership of a mining corporation may be
struck down as violative of the constitutional requirement, viz:

In this connection, you raise the following specific questions:

1. Can a Philippine corporation with 30% equity owned by foreigners enter into a mining service contract with a foreign
company granting the latter a share of not morethan 40% from the proceeds of the operations?

xxxx

By law, a mining lease may be granted only to a Filipino citizen, or to a corporation or partnership registered with the
[SEC] at least 60% of the capital of which is owned by Filipino citizens and possessing x x x.The sixty percent
Philippine equity requirement in mineral resource exploitation x x xis intended to insure, among other purposes, the
conservation of indigenous natural resources, for Filipino posterityx x x. I think it is implicit in this provision, even if it
refers merely to ownership of stock in the corporation holding the mining concession, that beneficial ownership of the
right to dispose, exploit, utilize, and develop natural resources shall pertain to Filipino citizens, and that the nationality
requirementis not satisfied unless Filipinos are the principal beneficiaries in the exploitation of the country’s natural
resources. This criterion of beneficial ownership is tacitly adopted in Section 44 of P.D. No. 463, above-quoted, which
limits the service fee in service contracts to 40% of the proceeds of the operation, thereby implying that the 60-40
benefit-sharing ration is derived from the 60-40 equity requirement in the Constitution.

xxxx

It is obvious that while payments to a service contractor may be justified as a service fee, and therefore, properly
deductible from gross proceeds, the service contract could be employed as a means of going about or circumventing
the constitutional limit on foreign equity participation and the obvious constitutional policy to insure that Filipinos retain
beneficial ownership of our mineral resources. Thus, every service contract scheme has to be evaluated in its entirety,
on a case to case basis, to determine reasonableness of the total "service fee" x x x like the options available tothe
contractor to become equity participant in the Philippine entity holding the concession, or to acquire rights in the
processing and marketing stages. x x x (emphasis supplied)

The "beneficial ownership" requirement was subsequently used in tandem with the "situs of control" todetermine the
nationality of a corporation in DOJ Opinion No. 84, S.of 1988, through the Grandfather Rule, despite the fact that both
the investee and investor corporations purportedly satisfy the 60-40 Filipino equity requirement:9

This refers to your request for opinion on whether or not there may be an investment in real estate by a domestic
corporation (the investing corporation) seventy percent (70%) of the capital stock of which is owned by another
domestic corporation withat least 60%-40% Filipino-Foreign Equity, while the remaining thirty percent (30%) of the
capital stock is owned by a foreign corporation.

xxxx

This Department has had the occasion to rule in several opinions that it is implicit in the constitutional provisions, even
if it refers merely to ownership of stock in the corporation holding the land or natural resource concession, that the
nationality requirement is not satisfied unless it meets the criterion of beneficial ownership, i.e. Filipinos are the
principal beneficiaries in the exploration of natural resources(Op. No. 144, s. 1977; Op. No. 130, s. 1985), and that in
applying the same "the primordial consideration is situs of control, whether in a stock or nonstock corporation"(Op. No.
178, s. 1974). As stated in the Register of Deeds vs. Ung Sui Si Temple (97 Phil. 58), obviously toinsure that
corporations and associations allowed to acquire agricultural land or to exploit natural resources "shall be controlled
by Filipinos." Accordingly, any arrangement which attempts to defeat the constitutional purpose should be eschewed
(Op. No 130, s. 1985).

We are informed that in the registration of corporations with the [SEC], compliance with the sixty per centum
requirement is being monitored by SEC under the "Grandfather Rule" a method by which the percentage of Filipino
equity in corporations engaged in nationalized and/or partly nationalized areas of activities provided for under the
Constitution and other national laws is accurately computed, and the diminution if said equity prevented (SEC Memo,
S. 1976). The "Grandfather Rule" is applied specifically in cases where the corporation has corporate stockholders
with alien stockholdings, otherwise, if the rule is not applied, the presence of such corporate stockholders could
diminish the effective control of Filipinos.

Applying the "Grandfather Rule" in the instant case, the result is as follows: x x x the total foreign equity in the
investing corporation is 58% while the Filipino equity is only 42%, in the investing corporation, subject of your query, is
disqualified from investing in real estate, which is a nationalized activity, as it does not meet the 60%-40% Filipino-
Foreign equity requirement under the Constitution.

This pairing of the concepts "beneficial ownership" and the "situs of control" in determining what constitutes"capital"
has been adopted by this Court in Heirs of Gamboa v. Teves.10 In its October 9, 2012 Resolution, the Court clarified,
thus:

This is consistent with Section 3 of the FIA which provides that where 100% of the capital stock is heldby "a trustee of
funds for pension or other employee retirement or separation benefits," the trustee is a Philippine national if "at least
sixty percent (60%) of the fund will accrue to the benefit of Philippine nationals." Likewise, Section 1(b) of the
Implementing Rules of the FIA provides that "for stocks to be deemed owned and held by Philippine citizens or
Philippine nationals, mere legal title is not enough to meet the required Filipino equity. Full beneficial ownership of the
stocks, coupled with appropriate voting rights, is essential." (emphasis supplied)
In emphasizing the twin requirements of "beneficial ownership" and "control" in determining compliance with the
required Filipino equity in Gamboa, the en bancCourt explicitly cited with approval the SEC en banc’s application in
Redmont Consolidated Mines, Corp. v. McArthur Mining, Inc., et al. of the Grandfather Rule, to wit:

Significantly, the SEC en banc, which is the collegial body statutorily empowered to issue rules and opinions on behalf
of SEC, has adopted the Grandfather Rulein determining compliance with the 60-40 ownership requirement in favor of
Filipino citizens mandated by the Constitution for certain economic activities. This prevailing SEC ruling, which the
SEC correctly adopted to thwart any circumvention of the required Filipino "ownership and control," is laid down in the
25 March 2010 SEC en banc ruling in Redmont Consolidated Mines, Corp. v. McArthur Mining, Inc., et al. x x x
(emphasis supplied)

Applying Gamboa, the Court, in Express Investments III Private Ltd. v. Bayantel Communications, Inc., 11 denied the
foreign creditors’ proposal to convert part of Bayantel’s debts to common shares of the company at a rate of 77.7%.
Supposedly, the conversion of the debts to common shares by the foreign creditors would be done, both directly and
indirectly, in order to meet the control test principle under the FIA.Under the proposed structure, the foreign creditors
would own 40% of the outstanding capital stock of the telecommunications company on a direct basis, while the
remaining 40% of shares would be registered to a holding company that shall retain, on a direct basis, the other 60%
equity reserved for Filipino citizens. Nonetheless, the Court found the proposal non-compliant with the Constitutional
requirement of Filipino ownership as the proposed structure would give more than 60% of the ownership of the
common shares of Bayantel to the foreign corporations, viz:

In its Rehabilitation Plan, among the material financial commitments made by respondent Bayantelis that its
shareholders shall relinquish the agreed-upon amount of common stock[s] as payment to Unsecured Creditors as per
the Term Sheet. Evidently, the parties intend to convert the unsustainable portion of respondent’s debt into common
stocks, which have voting rights. If we indulge petitioners on their proposal, the Omnibus Creditors which are foreign
corporations, shall have control over 77.7% of Bayantel, a public utility company. This is precisely the scenario
proscribed by the Filipinization provision of the Constitution.Therefore, the Court of Appeals acted correctly in
sustaining the 40% debt-to-equity ceiling on conversion. (emphasis supplied) As shown by the quoted legislative
enactments, administrative rulings, opinions, and this Court’s decisions, the Grandfather Rule not only finds basis, but
more importantly, it implements the Filipino equity requirement, in the Constitution.

Application of the Grandfather

Rule with the Control Test.

Admittedly, an ongoing quandary obtains as to the role of the Grandfather Rule in determining compliance with the
minimum Filipino equity requirement vis-à-vis the Control Test. This confusion springs from the erroneous assumption
that the use of one method forecloses the use of the other.

As exemplified by the above rulings, opinions, decisions and this Court’s April 21, 2014 Decision, the Control Test can
be, as it has been, applied jointly withthe Grandfather Rule to determine the observance of foreign ownership
restriction in nationalized economic activities. The Control Test and the Grandfather Rule are not, as it were,
incompatible ownership-determinant methods that canonly be applied alternative to each other. Rather, these
methodscan, if appropriate, be used cumulatively in the determination of the ownership and control of corporations
engaged in fully or partly nationalized activities, as the mining operation involved in this case or the operation of public
utilities as in Gamboa or Bayantel.

The Grandfather Rule, standing alone, should not be used to determine the Filipino ownership and control in a
corporation, as it could result in an otherwise foreign corporation rendered qualified to perform nationalized or partly
nationalized activities. Hence, it is only when the Control Test is first complied with that the Grandfather Rule may be
applied. Put in another manner, if the subject corporation’s Filipino equity falls below the threshold 60%, the
corporation is immediately considered foreign-owned, in which case, the needto resort to the Grandfather Rule
disappears.

On the other hand, a corporation that complies with the 60-40 Filipino to foreign equity requirement can be considered
a Filipino corporation if there is no doubtas to who has the "beneficial ownership" and "control" of the corporation. In
that instance, there is no need fora dissection or further inquiry on the ownership of the corporate shareholders in both
the investing and investee corporation or the application of the Grandfather Rule. 12 As a corollary rule, even if the 60-
40 Filipino to foreign equity ratio is apparently met by the subject or investee corporation, a resort to the Grandfather
Rule is necessary if doubt existsas to the locusof the "beneficial ownership" and "control." In this case, a further
investigation as to the nationality of the personalities with the beneficial ownership and control of the corporate
shareholders in both the investing and investee corporations is necessary.
As explained in the April 21,2012 Decision, the "doubt" that demands the application of the Grandfather Rule in
addition to or in tandem with the Control Test is not confined to, or more bluntly, does not refer to the fact that the
apparent Filipino ownership of the corporation’s equity falls below the 60% threshold. Rather, "doubt" refers to various
indicia that the "beneficial ownership" and "control" of the corporation do not in fact reside in Filipino shareholders but
in foreign stakeholders. As provided in DOJ Opinion No. 165, Series of 1984, which applied the pertinent provisions of
the Anti-DummyLaw in relation to the minimum Filipino equity requirement in the Constitution, "significant indicators of
the dummy status" have been recognized in view of reports "that some Filipino investors or businessmen are being
utilized or [are] allowing themselves to be used as dummies by foreign investors" specifically in joint ventures for
national resource exploitation. These indicators are:

1. That the foreign investors provide practically all the funds for the joint investment undertaken by these
Filipino businessmen and their foreign partner;

2. That the foreign investors undertake to provide practically all the technological support for the joint venture;

3. That the foreign investors, while being minority stockholders, manage the company and prepare all
economic viability studies.

Thus, In the Matter of the Petition for Revocation of the Certificate of Registration of Linear Works Realty
Development Corporation,13 the SEC held that when foreigners contribute more capital to an enterprise, doubt exists
as to the actual control and ownership of the subject corporation even if the 60% Filipino equity threshold is met.
Hence, the SEC in that one ordered a further investigation, viz:

x x x The [SEC Enforcement and Prosecution Department (EPD)] maintained that the basis for determining the level
of foreign participation is the number of shares subscribed, regardless of the par value. Applying such an
interpretation, the EPD rules that the foreign equity participation in Linear works Realty Development Corporation
amounts to 26.41% of the corporation’s capital stock since the amount of shares subscribed by foreign nationals is
1,795 only out of the 6,795 shares. Thus, the subject corporation is compliant with the 40% limit on foreign equity
participation. Accordingly, the EPD dismissed the complaint, and did not pursue any investigation against the subject
corporation.

xxxx

x x x [I]n this respect we find no error in the assailed order made by the EPD. The EPD did not err when it did not take
into account the par value of shares in determining compliance with the constitutional and statutory restrictionson
foreign equity.

However, we are aware that some unscrupulous individuals employ schemes to circumvent the constitutional and
statutory restrictions on foreign equity. In the present case, the fact that the shares of the Japanese nationals have a
greater par value but only have similar rights to those held by Philippine citizens having much lower par value, is
highly suspicious. This is because a reasonable investor would expect to have greater control and economic rights
than other investors who invested less capital than him. Thus, it is reasonable to suspectthat there may be secret
arrangements between the corporation and the stockholders wherein the Japanese nationals who subscribed to the
shares with greater par value actually have greater control and economic rights contrary to the equality of shares
based on the articles of incorporation.

With this in mind, we find it proper for the EPD to investigate the subject corporation. The EPD is advised to avail of
the Commission’s subpoena powers in order to gather sufficient evidence, and file the necessary complaint.

As will be discussed, even if atfirst glance the petitioners comply with the 60-40 Filipino to foreign equity ratio, doubt
exists in the present case that gives rise to a reasonable suspicion that the Filipino shareholders do not actually have
the requisite number of control and beneficial ownership in petitioners Narra, Tesoro, and McArthur. Hence, a further
investigation and dissection of the extent of the ownership of the corporate shareholders through the Grandfather Rule
is justified.

Parenthetically, it is advanced that the application of the Grandfather Rule is impractical as tracing the shareholdings
to the point when natural persons hold rights to the stocks may very well lead to an investigation ad infinitum. Suffice it
to say in this regard that, while the Grandfather Rule was originally intended to trace the shareholdings to the point
where natural persons hold the shares, the SEC had already set up a limit as to the number of corporate layers the
attribution of the nationality of the corporate shareholders may be applied.

In a 1977 internal memorandum, the SEC suggested applying the Grandfather Rule on two (2) levels of corporate
relations for publicly-held corporations or where the shares are traded in the stock exchanges, and to three (3) levels
for closely held corporations or the shares of which are not traded in the stock exchanges.14 These limits comply with
the requirement in Palting v. San Jose Petroleum, Inc.15 that the application of the Grandfather Rule cannot go beyond
the level of what is reasonable.

A doubt exists as to the extent of control and beneficial ownership of MBMI over the petitioners and their investing
corporate stockholders.

In the Decision subject of this recourse, the Court applied the Grandfather Rule to determine the matter of true
ownership and control over the petitioners as doubt exists as to the actual extent of the participation of MBMI in the
equity of the petitioners and their investing corporations.

We considered the following membership and control structures and like nuances:

Tesoro

Supposedly Filipino corporation Sara Marie Mining, Inc. (Sara Marie) holds 59.97% of the 10,000 commonshares of
petitioner Tesoro while the Canadian-owned company, MBMI, holds 39.98% of its shares.
Name Nationality Number of Shares Amount Amount Paid
Subscribed
Sara Marie Filipino 5,997 ₱5,997,000.00 ₱825,000.00
Mining, Inc.
MBMI Resources, Canadian 3,998 ₱3,998,000.00 ₱1,878,174.60
Inc.16
Lauro L. Salazar Filipino 1 ₱1,000.00 ₱1,000.00
Fernando B. Filipino 1 ₱1,000.00 ₱1,000.00
Esguerra
Manuel A. Filipino 1 ₱1,000.00 ₱1,000.00
Agcaoili
Michael T. Mason American 1 ₱1,000.00 ₱1,000.00
Kenneth Cawkel Canadian 1 ₱1,000.00 ₱1,000.00
Total 10,000 ₱10,000,000.00 ₱2,708,174.60

In turn, the Filipino corporation Olympic Mines & Development Corp. (Olympic) holds 66.63% of Sara Marie’s shares
while the same Canadian company MBMI holds 33.31% of Sara Marie’s shares. Nonetheless, it is admitted that
Olympic did not pay a single peso for its shares. On the contrary, MBMI paid for 99% of the paid-up capital of Sara
Marie.
Name Nationality Number of Shares Amount Amount Paid
Subscribed
Olympic Mines & Filipino 6,663 ₱6,663,000.00 P0.00
Development
Corp.17
MBMI Resources, Canadian 3,331 ₱3,331,000.00 ₱2,794,000.00
Inc.
Amanti Limson Filipino 1 ₱1,000.00 ₱1,000.00
Fernando B. Filipino 1 ₱1,000.00 ₱1,000.00
Esguerra
Lauro Salazar Filipino 1 ₱1,000.00 ₱1,000.00
Emmanuel G. Filipino 1 ₱1,000.00 ₱1,000.00

Hernando
Michael T. Mason American 1 ₱1,000.00 ₱1,000.00
Kenneth Cawkel Canadian 1 ₱1,000.00 ₱1,000.00
Total 10,000 ₱10,000,000.00 ₱2,800,000.00
The fact that MBMI had practically provided all the funds in Sara Marie and Tesoro creates serious doubt as to
the true extent of its (MBMI) control and ownership over both Sara Marie and Tesoro since, as observed by the
SEC, "a reasonable investor would expect to have greater control and economic rights than other investors who
invested less capital than him." The application of the Grandfather Rule is clearly called for, and as shown below, the
Filipinos’ control and economic benefits in petitioner Tesoro (through Sara Marie) fallbelow the threshold 60%, viz:

Filipino participation in petitioner Tesoro: 40.01%


66.67
(Filipino equity in Sara Marie) x 59.97 (Sara Marie’s share in Tesoro) = 39.98%
100

39.98% + .03% (shares of individual Filipino shareholders [SHs] in Tesoro)


=40.01%

Foreign participation in petitioner Tesoro: 59.99%


33.33
(Foreign equity in Sara Marie) x 59.97 (Sara Marie’s share in Tesoro) = 19.99%
100

19.99% + 39.98% (MBMI’s direct participation in Tesoro) + .02% (shares of foreign individual SHs in
Tesoro)
= 59.99%

With only 40.01% Filipino ownership in petitioner Tesoro, as compared to 59.99% foreign ownership of its shares, it is
clear that petitioner Tesoro does not comply with the minimum Filipino equity requirement imposed in Sec. 2, Art. XII
of the Constitution. Hence, the appellate court’s observation that Tesoro is a foreign corporation not entitled to an
MPSA is apt.

McArthur

Petitioner McArthur follows the corporate layering structure of Tesoro, as 59.97% of its 10, 000 common shares is
owned by supposedly Filipino Madridejos Mining Corporation (Madridejos), while 39.98% belonged to the Canadian
MBMI.
Name Nationality Number of Shares Amount Amount Paid
Subscribed
Madridejos Mining Filipino 5,997 ₱5,997,000.00 ₱825,000.00
Corporation
MBMI Resources, Canadian 3,998 ₱3,998,000.0 ₱1,878,174.60
Inc.18
Lauro L. Salazar Filipino 1 ₱1,000.00 ₱1,000.00
Fernando B. Filipino 1 ₱1,000.00 ₱1,000.00
Manuel A. Filipino 1 ₱1,000.00 ₱1,000.00
Agcaoili
Michael T. Mason American 1 ₱1,000.00 ₱1,000.00
Kenneth Cawkel Canadian 1 ₱1,000.00 ₱1,000.00
Total 10,000 ₱10,000,000.00 ₱2,708,174.60

In turn, 66.63% of Madridejos’ shares were held by Olympic while 33.31% of its shares belonged to MBMI. Yet again,
Olympic did not contribute to the paid-up capital of Madridejos and it was MBMI that provided 99.79% of the paid-up
capital of Madridejos.
Name Nationality Number of Shares Amount Amount Paid
Subscribed
Olympic Mines & Filipino 6,663 ₱6,663,000.00 P0.00
Development
Corp.19
MBMI Resources, Canadian 3,331 ₱3,331,000.00 ₱2,803,900.00
Inc.
Amanti Limson Filipino 1 ₱1,000.00 ₱1,000.00
Fernando B. Filipino 1 ₱1,000.00 ₱1,000.00
Esguerra
Lauro Salazar Filipino 1 ₱1,000.00 ₱1,000.00
Emmanuel G. Filipino 1 ₱1,000.00 ₱1,000.00
Hernando
Michael T. Mason American 1 ₱1,000.00 ₱1,000.00
Kenneth Cawkel Canadian 1 ₱1,000.00 ₱1,000.00
Total 10,000 ₱10,000,000.00 ₱2,809,900.00

Again, the fact that MBMI had practically provided all the funds in Madridejos and McArthur creates serious doubt as
to the true extent of its control and ownership of MBMI over both Madridejos and McArthur. The application of the
Grandfather Rule is clearly called for, and as will be shown below, MBMI, along with the other foreign shareholders,
breached the maximum limit of 40% ownership in petitioner McArthur, rendering the petitioner disqualified to an
MPSA:

Filipino participation in petitioner McArthur: 40.01%


66.67
(Filipino equity in Madridejos) x 59.97 (Madridejos’ share in McArthur) = 39.98%
100

39.98% + .03% (shares of individual Filipino SHs in McArthur)


=40.01%

Foreign participation in petitioner McArthur: 59.99%


33.33
(Foreign equity in Madridejos) x 59.97 (Madridejos’ share in McArthur) = 19.99%

19.99% + 39.98% (MBMI’s direct participation inMcArthur) + .02% (shares of foreign individual SHs in
McArthur)
= 59.99%

As with petitioner Tesoro, with only 40.01% Filipino ownership in petitioner McArthur, as compared to 59.99% foreign
ownership of its shares, it is clear that petitioner McArthur does not comply with the minimum Filipino equity
requirement imposed in Sec. 2, Art. XII of the Constitution. Thus, the appellate court did not err in holding that
petitioner McArthur is a foreign corporation not entitled to an MPSA.

Narra

As for petitioner Narra, 59.97% of its shares belonged to Patricia Louise Mining & Development Corporation (PLMDC),
while Canadian MBMI held 39.98% of its shares.
Name Nationality Number of Shares Amount Amount Paid
Subscribed
Patricia Lousie Filipino 5,997 ₱5,997,000.00 ₱1,677,000.00
Mining and
Development
Corp.
MBMI Resources, Canadian 3,996 ₱3,996,000.00 ₱1,116,000.00
Inc.20
Higinio C. Filipino 1 ₱1,000.00 ₱1,000.00
Mendoza,
Henry E. Filipino 1 ₱1,000.00 ₱1,000.00
Fernandez
Ma. Elena A. Filipino 1 ₱1,000.00 ₱1,000.00
Bocalan
Michael T. Mason American 1 ₱1,000.00 ₱1,000.00
Robert L. Canadian 1 ₱1,000.00 ₱1,000.00
McCurdy
Manuel A. Filipino 1 ₱1,000.00 ₱1,000.00
Agcaoili
Bayani H. Agabin Filipino 1 ₱1,000.00 ₱1,000.00
Total 10,000 ₱10,000,000.00 ₱2,800,000.00

PLMDC’s shares, in turn, were held by Palawan Alpha South Resources Development Corporation (PASRDC), which
subscribed to 65.96% of PLMDC’s shares, and the Canadian MBMI, which subscribed to 33.96% of PLMDC’s shares.
Name Nationality Number of Shares Amount Amount Paid
Subscribed
Palawan Alpha Filipino 6,596 ₱6,596,000.00 P0
South Resource
Development
Corp.
MBMI Resources, Canadian 3,396 ₱3,396,000.00 ₱2,796,000.00
Inc.21
Higinio C. Filipino 1 ₱1,000.00 ₱1,000.00
Mendoza, Jr.
Fernando B. Filipino 1 ₱1,000.00 ₱1,000.00
Esguerra
Henry E. Filipino 1 ₱1,000.00 ₱1,000.00
Fernandez
Ma. Elena A. Filipino 1 ₱1,000.00 ₱1,000.00
Bocalan
Michael T. Mason American 1 ₱1,000.00 ₱1,000.00
Robert L. Canadian 1 ₱1,000.00 ₱1,000.00
McCurdy
Manuel A. Filipino 1 ₱1,000.00 ₱1,000.00
Agcaoili
Bayani H, Agabin Filipino 1 ₱1,000.00 ₱1,000.00
Total 10,000 ₱10,000,000.00 ₱2,804,000.00

Yet again, PASRDC did not pay for any of its subscribed shares, while MBMI contributed 99.75% of PLMDC’s paid-up
capital. This fact creates serious doubt as to the true extent of MBMI’s control and ownership over both PLMDC and
Narra since "a reasonable investor would expect to have greater control and economic rights than other investors who
invested less capital than him." Thus, the application of the Grandfather Rule is justified. And as will be shown, it is
clear that the Filipino ownership in petitioner Narra falls below the limit prescribed in both the Constitution and the
Philippine Mining Act of 1995.

Filipino participation in petitioner Narra: 39.64%


66.02
(Filipino equity in PLMDC) x 59.97 (PLMDC’s share in Narra) = 39.59%
100

39.59% + .05% (shares of individual Filipino SHs in McArthur)


=39.64%

Foreign participation in petitioner Narra: 60.36%


33.98
(Foreign equity in PLMDC) x 59.97 (PLMDC’s share in Narra) = 20.38%
100

20.38% + 39.96% (MBMI’s direct participation in Narra) + .02% (shares of foreign individual SHs in
McArthur)
= 60.36%

With 60.36% foreign ownership in petitioner Narra, as compared to only 39.64% Filipino ownership of its shares, it is
clear that petitioner Narra does not comply with the minimum Filipino equity requirement imposed in Section 2, Article
XII of the Constitution. Hence, the appellate court did not err in holding that petitioner McArthur is a foreign corporation
not entitled to an MPSA.

It must be noted that the foregoing determination and computation of petitioners’ Filipino equity composition was
based on their common shareholdings, not preferred or redeemable shares. Section 6 of the Corporation Code of the
Philippines explicitly provides that "no share may be deprived of voting rights except those classified as ‘preferred’ or
‘redeemable’ shares." Further, as Justice Leonen puts it, there is "no indication that any of the shares x x x do not
have voting rights, [thus] it must be assumed that all such shares have voting rights." 22 It cannot therefore be gain said
that the foregoing computation hewed with the pronouncements of Gamboa, as implemented by SEC Memorandum
Circular No. 8, Series of 2013, (SEC Memo No. 8)23 Section 2 of which states:

Section 2. All covered corporations shall, at all times, observe the constitutional or statutory requirement.1âwphi1 For
purposes of determining compliance therewith, the required percentage of Filipino ownership shall be applied to
BOTH (a) the total outstanding shares of stock entitled to vote in the election of directors; AND (b) the total number of
outstanding shares of stock, whether or not entitled to vote in the election of directors.

In fact, there is no indication that herein petitioners issued any other class of shares besides the 10,000 common
shares. Neither is it suggested that the common shares were further divided into voting or non-voting common shares.
Hence, for purposes of this case, items a) and b) in SEC Memo No. 8 both refer to the 10,000 common shares of each
of the petitioners, and there is no need to separately apply the 60-40 ratio to any segment or part of the said common
shares.

III.

In mining disputes, the POA has jurisdiction to pass upon the nationality of applications for MPSAs

Petitioners also scoffed at this Court’s decision to uphold the jurisdiction of the Panel of Arbitrators (POA) of the
Department of Environment and Natural Resources (DENR) since the POA’s determination of petitioners’ nationalities
is supposedly beyond its limited jurisdiction, as defined in Gonzales v. Climax Mining Ltd. 24 and Philex Mining Corp. v.
Zaldivia.25

The April 21, 2014 Decision did not dilute, much less overturn, this Court’s pronouncements in either Gonzales or
Philex Mining that POA’s jurisdiction "is limited only to mining disputes which raise questions of fact," and not judicial
questions cognizable by regular courts of justice. However, to properly recognize and give effect to the jurisdiction
vested in the POA by Section 77 of the Philippine Mining Act of 1995, 26 and in parallel with this Court’s ruling in
Celestial Nickel Mining Exploration Corporation v. Macroasia Corp.,27 the Court has recognized in its Decision that in
resolving disputes "involving rights to mining areas" and "involving mineral agreements or permits," the POA has
jurisdiction to make a preliminary finding of the required nationality of the corporate applicant in order to determine its
right to a mining area or a mineral agreement.

There is certainly nothing novel or aberrant in this approach. In ejectment and unlawful detainer cases, where the
subject of inquiry is possession de facto, the jurisdiction of the municipal trial courts to make a preliminary adjudication
regarding ownership of the real property involved is allowed, but only for purposes of ruling on the determinative issue
of material possession.

The present case arose from petitioners' MPSA applications, in which they asserted their respective rights to the
mining areas each applied for. Since respondent Redmont, itself an applicant for exploration permits over the same
mining areas, filed petitions for the denial of petitioners' applications, it should be clear that there exists a controversy
between the parties and it is POA's jurisdiction to resolve the said dispute. POA's ruling on Redmont's assertion that
petitioners are foreign corporations not entitled to MPSA is but a necessary incident of its disposition of the mining
dispute presented before it, which is whether the petitioners are entitled to MPSAs.
Indeed, as the POA has jurisdiction to entertain "disputes involving rights to mining areas," it necessarily follows that
the POA likewise wields the authority to pass upon the nationality issue involving petitioners, since the resolution of
this issue is essential and indispensable in the resolution of the main issue, i.e., the determination of the petitioners'
right to the mining areas through MPSAs.

WHEREFORE, We DENY the motion for reconsideration WITH FINALITY. No further pleadings shall be entertained.
Let entry of judgment be made in due course.

SO ORDERED.

PRESBITERO J. VELASCO, JR.


Associate Justice

WE CONCUR:

DIOSDADO M. PERALTA
Associate Justice
I dissent. See Separate opinion
JOSE CATRAL MENDOZA
MARVIC M.V.F. LEONEN
Associate Justice
Associate Justice

FRANCIS H. JARDELEZA
Associate Justice

ATTESTATION

I attest that the conclusions in the above Resolution had been reached in consultation before the case was assigned
to the writer of the opinion of the Court's Division.

PRESBITERO J. VELASCO, JR.


Associate Justice
Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the
conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of
the opinion of the Court's Division.

MARIA LOURDES P.A. SERENO


Chief Justice

Footnotes

1Province of North Cotabato v. Government of the Republic of the Philippines Peace Panel on Ancestral
Domain (GRP), G.R. No. 183591, October 14, 2008, 568 SCRA 402, 460.

2 David v. Macapagal-Arroyo, G.R. No. 171396, etc., May 3, 2006, 489 SCRA 160; citing Province of
Batangas v. Romulo, G.R. No. 152774, May 27, 2004, 429 SCRA 736; Lacson v. Perez, 410 Phil. 78 (2001);
Albaña v. Comelec, 478 Phil. 941 (2004); Chief Supt. Acop v. Guingona Jr., 433 Phil. 62 (2002); SANLAKAS
v. Executive Secretary Reyes, 466 Phil. 482 (2004).

3 Republic Act No. (RA) 7942, effective April 14, 1995.

4 Villanueva, Cesar Lapuz, Philippine Corporate Law (2001), p. 54. Emphasis and italicization supplied.

5SEC. 127. Tax on Sale, Barter or Exchange of Shares of Stock Listed and Traded through the Local Stock
Exchange or through Initial Public Offering. —
(B) Tax on Shares of Stock Sold or Exchanged Through Initial Public Offering. — There shall be
levied, assessed and collected on every sale, barter, exchange or other disposition through initial
public offering of shares of stock in closely held corporations, as defined herein, a tax at the rates
provided hereunder based on the gross selling price or gross value in money of the shares of stock
sold, bartered, exchanged or otherwise disposed in accordance with the proportion of shares of stock
sold, bartered, exchanged or otherwise disposed to the total outstanding shares of stock after the
listing in the local stock exchange:

xxxx

For purposes of this Section, the term ‘closely held corporation’ means any corporation at least fifty
percent (50%) in value of the outstanding capital stock of all classes of stock entitled to vote is owned
directly or indirectly by or for not more than twenty (20) individuals.

For purposes of determining whether the corporation is a closely held corporation, insofar as such
determination is based on stock ownership, the following rules shall be applied:

(1) Stock not Owned by Individuals. — Stock owned directly or indirectly by or for a corporation,
partnership, estate or trust shall be considered as being owned proportionately by its shareholders,
partners or beneficiaries. x x x

6 Sec. 96. Definition and applicability of Title. –

A close corporation, within the meaning of this Code, is one whose articles of incorporation provide
that: (1) All the corporation’s issued stock of all classes, exclusive of treasury shares, shall be held of
record by not more than a specified number of persons, not exceeding twenty (20); (2) all the issued
stock of all classes shall be subject to one or more specified restrictions on transfer permitted by this
Title; and (3) The corporation shall not list in any stock exchange or make any public offering of any of
its stock of any class. Notwithstanding the foregoing, a corporation shall not be deemed a close
corporation when at least two-thirds (2/3) of its voting stock or voting rights is owned or controlled by
another corporation which is not a close corporation within the meaning of this Code.

Any corporation may be incorporated as a close corporation, except mining or oil companies, stock
exchanges, banks, insurance companies, publicutilities, educational institutions and corporations
declared to be vested with public interest in accordance with the provisions of this Code.

7Dated December 17, 2010; emphasis supplied. See also BIR Ruling Nos. 072-97, July 2, 1997 and 055-81,
March 23, 1981.

8 SEC En Banc Case No. 09-09-177, March 25, 2010.

9 Dated April 26, 1988.

10 G.R. No. 176579, October 9, 2012.

11 G.R. Nos. 175418-20, December 5, 2012.

12 See SEC-OGC Opinion No. 03-08 dated 15 January 2008.

13 SEC En Banc Case No. 07-10-205, November 25, 2010.

14 Villanueva, Cesar Lapuz. Philippine Corporate Law (2001), p. 54.

15 No. L-14441, December 17, 1966, 18 SCRA 924.

16 Emphasis supplied.

17 Emphasis supplied.

18 Emphasis supplied.

19 Emphasis supplied.
20 Emphasis supplied.

21 Emphasis supplied.

22 Dissenting Opinion, p. 41.

23Otherwise known as the "Guidelines on Compliance with the Filipino-Foreign Ownership Requirements
Prescribed in the Constitution and/or Existing Laws by Corporations Engaged in Nationalized and Partly
Nationalized Activities," dated May 20, 2013 and Published on May 22, 2013.

24 492 Phil. 682 (2005).

25 150 Phil. 547 (1972).

26 Section 77 of RA 7942:

Within thirty (30) days, after the submission of the case by the parties for the decision, the panel shall
have exclusive and original jurisdiction to hear and decide the following:

(a) Disputes involving rights to mining areas;

(b) Disputes involving mineral agreements or permits.

27 565 Phil 466 (2007). The Court held: "The phrase ‘disputes involving rights to mining areas’ refers to any
adverse claim, protest, or opposition to an application for mineral agreement. The POA therefore has the
jurisdiction to resolve any adverse claim, protest, or opposition to a pending application for a mineral
agreement filed with the concerned Regional Office of the MGB. This is clear from Secs. 38 and 41 of the
DENR A 96-40 x x x."

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